Executive Summary: Key Legal and Evidentiary Issues

• Plaintiffs challenged enforcement of a forum selection clause that would have required litigation in Texas.

• The court assessed whether the clause survived termination of the contract.

• Arguments included unconscionability and strong cause against enforcing the clause.

• The defendant’s motion to stay or dismiss the Ontario action was dismissed.

• The plaintiffs sought costs based on a Rule 49 offer, requesting substantial indemnity.

• The court awarded partial indemnity costs, setting a fair amount of $13,000.

Facts and procedural background

The plaintiffs, JLPM and Dwight Anthony Jr., initiated an action in Ontario against Ferrovial Services Canada Limited, alleging breach of contract, negligence, negligent misrepresentation, and unjust enrichment. The dispute arose from a contractual relationship that contained a forum selection clause specifying Texas as the jurisdiction for any legal proceedings. However, following the termination of the contract by Ferrovial, the plaintiffs brought the action in Ontario, where they are based.

Ferrovial brought a motion seeking to dismiss or stay the proceeding on the basis that the forum selection clause required the dispute to be litigated in Texas. The plaintiffs opposed the motion, arguing the clause did not survive termination, was unconscionable, or should not be enforced for other equitable reasons. The motion judge dismissed Ferrovial’s request, allowing the Ontario action to proceed.

Legal analysis and outcome on costs

After the dismissal of the motion, the plaintiffs sought an award of costs. The central legal issue was whether costs should be awarded immediately or left to be determined after trial ("in the cause"). The defendant argued for costs to be left in the cause, citing a prior decision. The plaintiffs relied on Rule 57.03 of Ontario’s Rules of Civil Procedure, which typically requires costs to be awarded on contested motions unless exceptional circumstances apply. The court found no reason to defer the costs ruling and proceeded to assess them immediately.

The parties disputed the scale of costs. The plaintiffs submitted that they had made a formal Rule 49 offer to settle prior to substantial progress on the motion, which included a proposal that no costs be payable if the defendant abandoned the motion. They claimed this triggered entitlement to substantial indemnity costs under Rule 49.10(1). The defendant disagreed, asserting that Rule 49.10(2) applied, limiting the plaintiffs to partial indemnity.

The court acknowledged that the rule was a poor fit for a situation where the responding party to the motion was the successful party but exercised its discretion to depart from the strict wording of the rule. It rejected the claim for substantial indemnity costs in the absence of reprehensible conduct and awarded partial indemnity costs.

Assessment of complexity and fairness

The motion required significant legal analysis, particularly on whether the forum selection clause survived termination and whether its enforcement was just. The contract appeared to be a standard form agreement that the plaintiffs had limited ability to negotiate. The plaintiffs were also a sole proprietorship with no ties to Texas, and relocating the litigation there would have been burdensome.

While the plaintiffs raised multiple legal arguments, only one ultimately succeeded. However, the court did not fault them for taking this approach, considering the importance of the motion and the uncertainty in the law. The defendant’s contract drafting, which omitted the forum clause from the list of surviving provisions post-termination, also contributed to the complexity.

In conclusion, the court awarded the plaintiffs $13,000 in costs on a partial indemnity basis, inclusive of fees, disbursements, and taxes, to be paid within 30 days.